Using Tech To Automate Supply Chain In The Manufacturing Industry

Sep 06, 2018

Only 1.1% of the industrial buying market in the Indian manufacturing indutry was involved in organised distribution.

The supplies in manufacturing industry have always been procured offline, for the last 40-50 years. This legacy way of doing things has largely been disorganised and disjointed, as businesses have not been able to automate the supply chain vertical. Moglix utilises technology to set timely reminders, send price comparisons and updated category of products to ensure smooth delivery of purchase orders. In recent times, they have also introduced Green GST in June 2017 as a SaaS product. “The GST has impacted the manufacturing sector most positively, given the number of indirect taxes they incurred. Green GST automates the new taxing regulations and payments compliances for our existing clients in one seamless platform,” he adds.

moglix-b2b-supply chain-manufacturing industry

Moglix: Automating Supply Chain Of 200 Large Manufacturing Companies, 100K SMEs And More

Moglix now caters to both SMEs and large manufacturing companies with tens of thousands in turnover. It counts names such as LoMax, Havell’s, Kirloskar and its clients are spread over the automotive, pharma and FMCG sectors. In 2017, they claim to have 200 large customers and about 100K SMEs that they do business with and a mix of need-based and recurring orders. The average ticket size is $155 (INR 10,000).

As shared by Rahul, for the larger customers, they offer bulk discounts, ERP related changes and fine-tuned pre-ordering SLAs (sales level agreements), where Moglix makes its revenue is by charging a certain percentage as commission on every transaction.

Here, the main concern is to ensure that manufacturing plants run smoothly and do not shut down for lack of supplies. They also utilise the latest SAP-compliant systems to enable SLAs that are carefully and accurately calibrated.

Lastly, they maintain involved relationships with these customers to ensure smoother processes. “It is unreasonable to expect that manufacturers’ mindsets will not happen in a single month. It is a continuous process,” said Rahul.

Dealing With Competitors, Fluctuations In The Market And What Lies Ahead

Demonetisation has impacted most industries in some way or the other. While digital payments and fintech, in general, have largely benefitted from the drive, other businesses like those in manufacturing industry which were formerly dependent on cash transactions took a hit. One of those businesses was B2B ecommerce company Tolexo. In the first half of 2017, Tolexo announced layoffs, citing demonetisation as a major reason for the same, followed by shutting down the company entirely.

The mantra for avoiding such pitfalls remains the same for all. “If one is not able to figure out the problem and the solution for it, then fate remains undecided,” said Rahul.

While this particular competitor ended up going quietly into the night, Moglix does have competition from other companies such as Industrybuying, Urjakart, WholesaleDock, among others. In addition, AmazonBusiness which has received in excess of $50 Mn in funds to penetrate Indian SMEs and automate their supply chain needs, is now a significant player in the B2B ecommerce space.

But Rahul remains undeterred. “We don’t worry about our competitors. Our primary understanding is to figure out how users buy offline and convert them into online users. As I mentioned already, this is a continuous process. Not an overnight one.”

And Rahul does seem to have a plan. Although he declines to reveal actual revenue figures, the Moglix team is now getting ready to expand to three more locations in India. Over the next 18 months, the company wants to go after the automotive belt in Pune, Chennai and Delhi-NCR. They are also looking to aggressively acquire 1,000 large name customers.

East India is still a no-go because Moglix enters a new market only after carefully studying several factors such as ease of doing business, how large the market is, or if it has a robust industrial belt. “If the answer to all these questions is positive and the numbers match up, then it is just a matter of how Moglix can add value to the region,” Rahul says.

Editor’s Note

For a company such as Moglix, which was started in one of the older verticals, B2B ecommerce, the opportunities that lie ahead are a different story.

With businesses becoming globally competitive and decisions taken with the speed of thought, automation is the new keyword for any industry. The recent takeover of Corus by Tata Steel and the bid by India’s aluminum major Hindalco for Novelis, show how some of the companies in the Indian manufacturing industry are aggressively pursuing global growth opportunities. As suggested by Automation Industry Association, the growth of companies in manufacturing industry will thus be determined by their ability to achieve convergence among people, processes, and technology. And this convergence is achieved through collaborative automation.

Be it automotive, pharmaceutical, industry supplies or any other segment of manufacturing industry, supply chain plays a primary role in the growth and expansion of the business. An effective supply chain management not only helps a business in enabling planners to accurately estimate future needs for supply & extends to execution with the planning of their plants, transportation & logistics, but also helps in estimating future demand for its products.

At present, Asia is a host to three economies viz. China, Japan & India and account for more than 35% of world GDP. And being a nation with the youngest population of all, India has the opportunity to scale much faster, with the manufacturing industry contributing a major portion. In line with the tech solutions offered by B2B ecommerce companies such as Moglix, and other available technologies such as RFID, the organisations need to take care of warehousing, inventory management, as well as transportation for maintaining an efficient supply chain management. Thus making the India Vision 2020 finally true.

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